Misfeasance proceedings fall outside winding-up bar, so Central Government consent was unnecessary; withdrawal of the summons was allowed.

Misfeasance proceedings initiated by the official liquidator under section 543 of the Companies Act, 1956 were held not to be a "proceeding for winding up" within section 35 of the Sick Textile Undertakings (Nationalisation) Act, 1974. The statutory bar was confined to a petition or proceeding for a winding-up order, so Central Government consent was unnecessary for continuance of the misfeasance action, and the proceedings did not require continuation by the National Textile Corporation. The court also permitted the liquidator to withdraw the misfeasance summons, noting that the estate and proceeds had vested for the benefit of the nationalised undertaking, but no funds were being provided to prosecute the matter further.

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Issues: (i) Whether misfeasance proceedings taken out by the official liquidator were a proceeding for winding up requiring the consent of the Central Government under section 35 of the Sick Textile Undertakings (Nationalisation) Act, 1974; (ii) Whether the official liquidator could be authorised to withdraw the misfeasance summons in the circumstances of the case.

Issue (i): Whether misfeasance proceedings taken out by the official liquidator were a proceeding for winding up requiring the consent of the Central Government under section 35 of the Sick Textile Undertakings (Nationalisation) Act, 1974.

Analysis: The nationalisation statute vested the sick textile undertaking and all rights and interests in it in the Central Government, but section 35 was confined to a proceeding for winding up, which was held to mean a petition or proceeding for a winding-up order and not a proceeding in the course of winding up. Misfeasance proceedings under section 543 of the Companies Act, 1956, were held to be summary proceedings enforcing the company's rights and were outside section 35. They also did not fall within section 4(6) or section 5(2) of the nationalisation Act so as to require continuation by the National Textile Corporation.

Conclusion: The official liquidator was not required to obtain the consent of the Central Government under section 35 for continuance of the misfeasance proceedings.

Issue (ii): Whether the official liquidator could be authorised to withdraw the misfeasance summons in the circumstances of the case.

Analysis: Since the liquidation estate and the fruits of the proceedings stood vested for the benefit of the nationalised undertaking, but no funds were being provided to prosecute the summons, the Court found it inequitable to compel the official liquidator to proceed further at his own expense. In those circumstances, withdrawal of the summons was permitted.

Conclusion: The official liquidator was authorised to withdraw the misfeasance summons.

Final Conclusion: The report was disposed of by holding that Central Government consent was unnecessary for the misfeasance proceedings, while the liquidator was permitted to withdraw those proceedings; other directions were left open.

Ratio Decidendi: A proceeding for winding up denotes a proceeding for a winding-up order, whereas misfeasance proceedings are proceedings in the course of winding up and, absent express inclusion, are not caught by a statutory bar directed only to winding-up proceedings.

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